Competition in Two-Sided Markets
Mark Armstrong ()
Industrial Organization from University Library of Munich, Germany
There are many examples of markets involving two groups of agents who need to interact via 'platforms', and where one group's benefit from joining a platform depends on the number of agents from the other group who join the same platform. This paper presents theoretical models for three variants of such markets: a monopoly platform; a model of competing platforms where each agent must choose to join a single platform; and a model of 'competing bottlenecks', where one group wishes to join all platforms. The main determinants of equilibrium prices are (i) the relative sizes of the cross-group externalities, (ii) whether fees are levied on a lump-sum or per-transaction basis, and (iii) whether a group joins just one platform or joins all platforms.
Keywords: Two-sided markets; network externalities; supermarkets; advertising (search for similar items in EconPapers)
JEL-codes: L (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-mic and nep-net
Note: Type of Document - pdf; pages: 32
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Journal Article: Competition in two‐sided markets (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpio:0505009
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